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CARES Act Expands Unemployment Benefits

Client Alerts

April 02, 2020

On March 27, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Among other provisions, the new law expands state unemployment insurance benefits by providing a $600 weekly unemployment benefit that is in addition to the maximum benefits provided under state law. Employees may receive $600 per week, even if that amount exceeds their prior income. Employees who remain employed through telework, and those collecting paid sick leave or other paid leave benefits, are not eligible for the expanded unemployment benefit. But they may receive other payments under CARES, such as the employer tax credits for subsidizing employees with reduced hours.

These expanded benefits are also available to people typically not eligible for state unemployment benefits, such as independent contractors, consultants, self-employed individuals, people who seek part-time employment, and people with insufficient work histories to be employed. The worker must be otherwise eligible for state unemployment benefits (as modified by the states pursuant to the earlier DOL directive waiving waiting periods, looking for work requirements, etc.). The expanded unemployment benefits will be administered and paid through the state unemployment programs.

In addition to those people otherwise eligible for unemployment benefits under state law, the expanded benefits are available for individuals unable to work due to the COVID-19 pandemic for any of the following reasons:

The individual has been diagnosed with COVID-19 or has symptoms and is awaiting a diagnosis.

A member of the individual’s household has been diagnosed with COVID-19.

The individual is the primary caregiver for a child or other person unable to attend school or daycare due to a COVID-19 related closure, and such school or facility is needed for the person to work.

The individual is unable to reach their place of work due to a COVID-19 quarantine.

The individual is unable to reach their place of employment due to advice from a health care provider to self-quarantine.

The individual was scheduled to begin work but has no job as the result of a COVID-19 related reason.

The individual has become the major provider or breadwinner for a household because the previous breadwinner died as a result of COVID-19.

The individual has been forced to quit work as the direct result of COVID-19.

The individual’s place of employment closed as a result of COVID-19.

The expanded benefits will be paid retroactive to January 27, 2020, and they expire December 31, 2020. They last for a maximum of 39 weeks. However, people who receive regular state unemployment benefits and exhaust them after 26 weeks can receive an additional 13 weeks of such standard state maximum benefits if they can demonstrate that they are looking for work during this extended period.

There are many unanswered questions on how these benefits will be calculated and administered that will need to be addressed through guidance and regulations, including issues such as how people not typically covered under state unemployment insurance programs can apply for and receive benefits. Applicants can self-certify eligibility, but it is not clear how this will work in practice. Also, state governments may need to amend their unemployment insurance laws to take advantage of the new benefits.